Why Digital Identity is About More Than Fighting Fraud

Digital identity used to be something that people considered “just tick-the-boxes” technology.

But as Steve Durney, vice president of strategy at Prove, told PYMNTS, forward-thinking companies can use digital identity as a way to differentiate themselves … and actually generate more revenue by improving the customer experience.

There’s certainly room for many companies to improve how they verify and authenticate users. As it stands now, there are speed bumps in the mix as we conduct more of our daily commerce online.

“The old joke,” he said, “is that secure and fast are not friends, and they’re not great dance partners. You wind up sacrificing one for the other.” Any time that users are attempting to get through a slew of online screens just to simply make a payment or to onboard themselves to set up a loyalty account, said Durney — well, those journeys come with a lot of friction.

The enterprise-level challenge, he said, is to balance security and convenience in such a way that consumers complete those onboarding and verification activities … and businesses keep their top-line momentum intact.

A Tough Trade-Off

That’s no easy undertaking, as Durney observed. Here’s the quandary: Make it too easy to make transactions, and companies and consumers are exposed to the fraudsters. Make it too hard, and the shopping cart gets abandoned. The consumer, forced to pause, may disappear and never return.

It’s more important than ever for security professionals to consider their tech investments and ID efforts, said Durney. In the current macro environment, the fraud threat is increasing. More people do shadier things when they’re stressed, said Durney, and that includes hacking.

In addition, companies are finding it critical to do more with less, so streamlining business processes while improving top-line trajectory is an opportunity no firm should pass up. Regulations and compliance landscapes are shifting.

“When the economy is challenged, it’s worthwhile for firms to be introspective about their own defenses and the strength of those defenses — and whether they’re in a position to fend off attacks,” he said.

Amazon has set a high bar for eCommerce. Consumers are used to the experience where one click gets us through the transaction, through the payment … and to the goods being sent on their way to the homestead.

That might be an aspiration for many companies — and getting there means rethinking how they think about verifying users. Through the past few years, Durney said, a number of providers (including Prove) have been making it easier for enterprises to identify who’s on the other side of the transaction.

The pain points are eased a bit by connecting mobile phones with the desktop experience, or mobile phones exclusively with consumers’ identity that allows them to “get through” to the merchant without the latter’s having to “absorb” any incremental fraud. In fact, he said, advanced digital IDs can make onboarding 79% faster.

In the identity space, he said, there are levels of verification. In some cases, he said, a company can make an “educated guess” as to whether they’re dealing with the right person, based on context and a variety of attributes. The next level of fraud prevention, he said, is “deterministic identity” tied to a driver’s licenses or tokens or devices themselves.

“You’re absolutely certain that it’s them, as opposed to the educated guess — and this is what risk-based authentication is,” said Durney.

For the companies that get it right, said Durney, the advantages accrue far beyond improved sales conversion ratios (which in turn give revenues a boost).

“Identity may be, usually, tied to the fraud aspect,” he said, “but there are many other units within various businesses that can use identity to their advantage.” He offered the example of using IDs within marketing efforts to make sure a company is triangulating and collecting info on the same person.

There’s value, too, in having the having the ability to cross-sell various products and services to a consumer once they are (digitally) onboarded — without having to ask them to re-verify themselves each time they apply for a loan or join a loyalty program. For the providers, if they make it a “low effort” endeavor for consumers to get what they want, it’s more than likely the individual’s going to want to come back for more.

With a reduction in fraud and friction, he told PYMNTS, digital identification can help make sure “you can still maintain your customer experience, you can still maintain your customer throughput … and you’re not obstructing those individuals with unnecessary effort. That’s a significant win for everybody involved.”